RUSH ENTERPRISES INC \TX\ Q2 FY2024 earnings call

• Achieved $2B in revenue and $78.7M net income, declared a $0.18 per common share cash dividend (8th increase since 2018).
• Past strategic initiatives helping better results than 2020 and 2016 troughs. Strength in public sector and vocational segments positively impacted Class 8 sales. Class 4-7 sales steady, good activity for medium-duty customers.
• Aftermarket parts sales kept pace, service sales outperformed industry. Freight recession/high interest rates hurting over-the-road carriers; demand from other segments partially offset.
• Expect no significant aftermarket demand improvement in Q3; committed to strategic initiatives for efficiency/service. Class 8 retail sales down 18.6% YOY in Q2 2024, expect lower sales for remainder of 2024. Class 4-7 sales expected consistent with Q2 in Q3. Used truck demand weak but depreciation slowed; well-positioned for H2. Instituted expense reductions in Q2; employees recognized for efforts.

Rush Enterprises achieved second quarter revenues of $2 billion. Net income was $78.7 million or $0.97 per diluted share. For truck sales: Sold 4,128 new Class 8 trucks in Q2 2024, accounting for 6.8% of the total U.S. Class 8 market and 1.7% of the Canadian market. Class 4 through 7 new truck sales reached 3,691 units in Q2, 5.7% of the U.S. market and 2.4% of the Canadian market. Sold 1,723 used trucks in Q2, down 7.8% year-over-year. For aftermarket products and services: Parts, service, and body shop revenues were $627.4 million, down 3.6% compared to Q2 2023, with an absorption ratio of 134%.

• Expect Class 8 retail sales to decrease from Q2 levels in H2 2024.
• Class 4-7 sales anticipated consistent with Q2 in Q3.
• Third quarter performance expected on par with Q2 for used trucks.
• Monitor economic factors impacting Class 4-7 demand. Believe in outperforming industry with strategic initiatives.

• Ongoing industry challenges, including low freight rates hurting over-the-road carriers.
• Decrease in demand from wholesale, independent parts distributors, and energy customers.
• Economic conditions/freight recession posing risks to sales/market share. Fluctuating market conditions and potential changes in customer spending.

Q: Daniel Imbro asks about back half pipeline for Class 8 and parts/service demand.

A: Rusty Rush says Class 8 back half similar to Q1, parts/service sees diversification helping maintain, but truck sales will be lower.

Q: Daniel Imbro follows up on cash flow uses.

A: M&A, shareholder return (dividend and repurchase), and growth through small acquisitions and store openings.

Q: Andrew Obin asks about vocational mix and orders.

A: Vocational mix around 40-50%, orders down, expecting gradual uptick in back half, economy uncertain but expecting pick-up after election.

Q: Unidentified Participant asks about vocational demand.

A: Vocational demand strong due to government spending and balanced business, expects continuation into 2025.

Q: Unidentified Participant asks about truck pricing.

A: Truck pricing to be more competitive in H2, build rates expected to come down, margins expected to stay consistent.